McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Master of Business Administration (MBA) .
Chapters
| 51. |
Which of the following is not a method of forecasting exchange rate volatility? |
| A. | using the absolute forecast error as a percentage of the realized value. |
| B. | using the volatility of historical exchange rate movements as a forecast for the future. |
| C. | using a time series of volatility patterns in previous periods. |
| D. | deriving the exchange rate's implied standard deviation from the currency option pricing model. |
| Answer» A. using the absolute forecast error as a percentage of the realized value. | |
| 52. |
Assume the Canadian dollar is equal to £0.51 and the Peruvian Sol is equal to £0.16. The value of the Peruvian Sol in Canadian dollars is: |
| A. | about .3621 Canadian dollars. |
| B. | about 2.36 Canadian dollars. |
| C. | about .3137 Canadian dollars. |
| D. | about 2.51 Canadian dollars. |
| Answer» C. about .3137 Canadian dollars. | |
| 53. |
When the foreign exchange market opens in the UK each morning, the opening exchange rate quotations will be based on the: |
| A. | closing prices in the U.S. during the previous day. |
| B. | closing prices in Canada during the previous day. |
| C. | prevailing prices in locations where the foreign exchange markets have been open. |
| D. | officially set by central banks before the U.S. market opens. |
| Answer» C. prevailing prices in locations where the foreign exchange markets have been open. | |
| 54. |
The equilibrium exchange rate of pounds is $1.70. At an exchange rate of $1.72 per pound: |
| A. | U.S. demand for pounds would exceed the supply of pounds for sale and there would be a shortage of pounds in the foreign exchange market. |
| B. | U.S. demand for pounds would be less than the supply of pounds for sale and there would be a shortage of pounds in the foreign exchange market. |
| C. | U.S. demand for pounds would exceed the supply of pounds for sale and there would be a surplus of pounds in the foreign exchange market. |
| D. | U.S. demand for pounds would be less than the supply of pounds for sale and there would be a surplus of pounds in the foreign exchange market. |
| Answer» D. U.S. demand for pounds would be less than the supply of pounds for sale and there would be a surplus of pounds in the foreign exchange market. | |
| 55. |
If inflation in New Zealand suddenly increased while euro area inflation stayed the same, there would be: |
| A. | an inward shift in the demand schedule for NZ$ and an outward shift in the supply schedule for NZ$. |
| B. | an outward shift in the demand schedule for NZ$ and an inward shift in the supply schedule for NZ$. |
| C. | an outward shift in the demand schedule for NZ$ and an outward shift in the supply schedule for NZ$. |
| D. | an inward shift in the demand schedule for NZ$ and an inward shift in the supply schedule for NZ$. |
| Answer» A. an inward shift in the demand schedule for NZ$ and an outward shift in the supply schedule for NZ$. | |
| 56. |
If portable disk players made in China are imported into the United States, the Chinese manufacturer is paid with |
| A. | international monetary credits. |
| B. | dollars. |
| C. | yuan, the Chinese currency. |
| D. | euros, or any other third currency. |
| Answer» C. yuan, the Chinese currency. | |
| 57. |
In the foreign exchange market, the ________ of one country is traded for the ________ of another country. |
| A. | currency; currency |
| B. | currency; financial instruments |
| C. | currency; goods |
| D. | goods; goods |
| Answer» A. currency; currency | |
| 58. |
Which of the following examples definitely illustrates a depreciation of the U.S. dollar? |
| A. | The dollar exchanges for 1 pound and then exchanges for 1.2 pounds. |
| B. | The dollar exchanges for 250 yen and then exchanges for 275 francs. |
| C. | The dollar exchanges for 100 francs and then exchanges for 120 yen. |
| D. | The dollar exchanges for 120 francs and then exchanges for 100 francs |
| Answer» D. The dollar exchanges for 120 francs and then exchanges for 100 francs | |
| 59. |
By definition, currency appreciation occurs when |
| A. | the value of all currencies fall relative to gold. |
| B. | the value of all currencies rise relative to gold. |
| C. | the value of one currency rises relative to another currency. |
| D. | the value of one currency falls relative to another currency. |
| Answer» C. the value of one currency rises relative to another currency. | |
| 60. |
If U.S. inflation suddenly increased while European inflation stayed the same, there would be: |
| A. | an increased U.S. demand for Euros and an increased supply of Euros for sale. |
| B. | a decreased U.S. demand for Euros and an increased supply of Euros for sale. |
| C. | a decreased U.S. demand for Euros and a decreased supply of Euros for sale. |
| D. | an increased U.S. demand for Euros and a decreased supply of Euros for sale. |
| Answer» D. an increased U.S. demand for Euros and a decreased supply of Euros for sale. | |
| 61. |
Under a fixed exchange rate system: |
| A. | central bank intervention in the foreign exchange market is often necessary; |
| B. | central bank intervention in the foreign exchange market is not necessary since rates do not move; |
| C. | central bank intervention in the foreign exchange market is not permitt |
| Answer» A. central bank intervention in the foreign exchange market is often necessary; | |
| 62. |
Given a home country and a foreign country, purchasing power parity suggests that: |
| A. | the home currency will appreciate if the current home inflation rate exceeds the current foreign inflation rate; |
| B. | the home currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate. |
| C. | the home currency will depreciate if the current home interest rate exceeds the current foreign interest rate; |
| D. | the home currency will depreciate if the current home inflation rate exceeds the current foreign interest rate; |
| Answer» B. the home currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate. | |
| 63. |
If purchasing power parity were to hold even in the short run, then: |
| A. | quoted nominal exchange rates should be stable over time. |
| B. | real exchange rates should tend to increase over time; |
| C. | real exchange rates should tend to decrease over time; |
| D. | real exchange rates should be stable over time; |
| Answer» D. real exchange rates should be stable over time; | |
| 64. |
The international Fisher effect suggests that should pound interest rates exceed US dollar interest rates: |
| A. | the pound’s value will remain constant; |
| B. | the pound will be at a discount on the dollar; |
| C. | UK inflation rate will decrease. |
| D. | the pound will depreciate against the dollar; |
| Answer» D. the pound will depreciate against the dollar; | |
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